For Nigeria’s economy to achieve the much desired double-digit growth, the Federal Government must eliminate subsidies in fuel, foreign exchange, and electricity, while paying greater attention to security and infrastructure, according to Mustafa Chike-Obi, immediate past chief executive of the Asset Management Corporation of Nigeria (AMCON).
Speaking in Lagos on Monday, at an agenda-setting forum as the second four-year term of President Muhammadu Buhari begins in earnest, Chike-Obi lamented that these forms of subsidies were hindering other sectors that need urgent attention, besides slowing down hampering GDP.
Addressing members of the Finance Correspondents Association of Nigeria (FICAN) on theme, “Repositioning the Nigerian Economy for sustainable growth,” Chike-Obi, Executive Vice Chairman, Alpha African Advisory, lamented that rich Nigerians benefit more from fuel subsidy, just as removing electricity subsidy will attract significant investments to the power sector and unlock other opportunities.
He wondered why the Federal Government should continue subsidizing Premium Motor Spirit (petrol), spending all of N1.2tr per year, apart from some other hidden loses no one is allowed to see.
According to him, “who gets the fuel subsidy? …the rich people with six cars are those benefitting from fuel subsidy.
“The average rich person in Ikoyi is getting approximately 100 times a year fuel subsidy than the person in Shomolu in Lagos,” he stressed, adding that, “everybody deserves to have electricity but you charge electricity based on those who needed it the most in the market price. Most people that use generator pay N160/Kwh and pays comfortably.
“If you tell these power companies that they can sell power at N160/kwh, they will make sure that more power will be generated (and distributed).”
He also expressed concern about Nigeria’s rising debt service ratio, which according to him could be about 70% of annual revenue, warning: “It is almost a guarantee that Nigeria is going to be talking about debt rescheduling soon and we need to start putting our house in order ahead of that.”
Chike-Obi stressed the need for coherent and forward-looking policies to address the myriad of problems confronting Nigeria.
“We are badly in need of good leadership… we need a leader that would map out the strategy and roadmap for economic growth in this country.
“There is a need for coherent monetary and fiscal policies. For me, the position of a CBN Governor should be a cabinet position and the CBN Governor should always be meeting with the Minister of Finance and the Minister of Budget and Planning every two weeks,” he added.
According to the former AMCON CEO, revenue mobilization is Nigeria’s biggest problem.
In addition, he proposed the creation of a Ministry of Infrastructure.